In this article, we discuss the 5 best farmland stocks to buy now. If you want to read our discussion on the latest developments in the farming industry, go directly to the 10 Best Farmland Stocks to Buy Now.
5. Bunge Limited (NYSE:BG)
Number of Hedge Fund Holders: 48
Bunge Limited (NYSE:BG) is an agriculture and food company involved in transporting, storing, and selling specialty oils and milled grains to leading consumer and restaurant brands.
Sam Margolin at Wolfe Research started coverage on Bunge Limited (NYSE:BG) stock with an ‘Outperform’ rating and a target price of $127. The analyst believes the company can provide some upside on the growth guidance it shared with investors due to the favorable commodity price environment. The analyst added that the company’s expected free cash flow yield for FY23 is significantly higher than the average observed between 2015 and 2019.
Although Bunge Limited (NYSE:BG) missed revenue and adjusted EPS estimates with its Q2 2022 results, it increased its minimum FY22 adjusted EPS guidance by $0.50 to $12. Furthermore, Bunge Limited (NYSE:BG) also approved a $1.25 billion share buyback plan to be completed by 2026.
Old West Investment Management presented its insights on Bunge Limited (NYSE:BG) in its Q1 2022 investor letter. Here’s what the firm said:
“Bunge (pronounced BUN-GEE) Ltd (NYSE:BG) is one of the biggest agribusinesses and food companies in the world. There are four worldwide companies that dominate the sector, the others being Archer-Daniels-Midland Cargill, and Dreyfuss. One of our favorite ways to screen for new ideas is following insider buying. When I saw the Form 4 filed by new Bunge CEO Greg Heckman, his purchase of $9 million of BG stock intrigued me. My initial thought was the company gave him the stock as a signing bonus. I contacted BG Investor Relations and asked whether it was a signing bonus or did Heckman actually write a check for $9 million. IR assured me it was his own hard-earned money that he invested in the company he was about to run.
Heckman was a long time executive at Conagra Foods who obviously sensed opportunity at BG. One of his first moves as CEO was to move the company’s HQ from New York to St. Louis, right in the middle of America’s breadbasket. BG had been plagued for years with poor decisions by underperforming management. Heckman’s decision to move to St. Louis was indicative of a no-nonsense style and he would commence cutting expenses and selling non-core assets…” (Click here to see the full text)
4. Nutrien Ltd. (NYSE:NTR)
Number of Hedge Fund Holders: 48
Nutrien Ltd. (NYSE:NTR) is a Saskatoon, Canada-based fertilizer company that has the distinction of being the biggest manufacturer of potash and the third biggest manufacturer of nitrogen fertilizer in the world.
Although Nutrien Ltd. (NYSE:NTR) missed revenue estimates for Q2 2022, it surpassed adjusted EPS forecasts for the period. The company’s revenue achieved year-over-year (YoY) growth of 48% to $14.5 billion during Q2. Furthermore, net income rose from $1.94 per share to $6.51 per share. Nutrien Ltd.’s (NYSE:NTR) annual forward dividend yield stands at 2.10% as of August 22.
Following the release of its latest quarterly results, Ben Isaacson at Scotiabank upgraded Nutrien Ltd. (NYSE:NTR) stock from ‘Sector Perform’ to ‘Outperform’ on August 9. The analyst assigned the stock a target price of $110 and highlighted his bullish outlook on nitrogen fertilizers. Furthermore, Isaacson anticipates the potash market to moderate in the future and believes that this has been priced into the stock. The analyst believes that Nutrien Ltd. (NYSE:NTR) stock has strong fundamental support at a sum-of-the-parts price of $112.
3. The Mosaic Company (NYSE:MOS)
Number of Hedge Fund Holders: 50
The Mosaic Company (NYSE:MOS) is a Florida-based miner and processor of phosphate and potash minerals into fertilizers.
The U.S.’s biggest manufacturer of potash and phosphate fertilizer was upgraded from ‘Neutral’ to ‘Buy’ on August 3 by P.J. Juvekar at Citi. The analyst also increased the target price on the stock from $57 to $61. Juvekar anticipates agriculture stocks to outperform the broader market given the uncertain macroeconomic outlook. The analyst believes that the agriculture industry and the broader economy are in different phases of the economic cycle, with fertilizer stocks expected to come into the limelight again after the seasonal slowdown experienced during the summer months. As the Latin American crop planting season comes into focus, fertilizer stocks like The Mosaic Company (NYSE:MOS) will again receive a boost.
On August 18, The Mosaic Company (NYSE:MOS) declared a quarterly dividend of $0.15 per share, which translates into an annual forward yield of 1.11% for the stock.
The Mosaic Company (NYSE:MOS) was mentioned in the Q1 2022 investor letter of Carillon Tower Advisers. Here’s what the firm said:
“Despite a rally near the end of the quarter, major equity indexes closed lower as fear of U.S. Federal Reserve (FED) balance sheet tapering, interest rate hikes, and war in the Ukraine sent the bulls into retreat. Supply chains eased for some goods, but remained challenged for many commodities including energy, agriculture, and fertilizer due to war and general scarcity, and also in many consumer products as semiconductors remained in short supply. Potash and phosphate fertilizer producer Mosaic (NYSE:MOS) performed strongly as war exacerbated already short supplies of key oil and gas exploration.”
2. CF Industries Holdings, Inc. (NYSE:CF)
Number of Hedge Fund Holders: 52
CF Industries Holdings, Inc. (NYSE:CF) is an Illinois-based manufacturer and distributor of various kinds of fertilizers.
CF Industries Holdings, Inc. (NYSE:CF) believes that the continued requirement to restock grain reserves around the world is likely to drive up global nitrogen demand. Hence, the company anticipates producing significant free cash flow for a long time. CF Industries Holdings, Inc. (NYSE:CF) plans to increase its ammonia production footprint while providing returns to shareholders. The stock offers a dividend yield of 1.51% as of August 22.
On August 10, Benjamin Theurer upgraded CF Industries Holdings, Inc. (NYSE:CF) stock from ‘Equal Weight’ to ‘Overweight’ and increased the target price from $103 to $120. The analyst highlighted that due to lower natural gas prices in the U.S. compared to Europe, CF Industries Holdings, Inc. (NYSE:CF) has the advantage of producing low-cost ammonia. This will aid the company in outperforming its European competitors.
Analysts believe that some players in Europe will not be able to compete as strong demand and tight supply will cause challenges, benefiting CF Industries Holdings, Inc. (NYSE:CF). Given the macroeconomic conditions, experts find it very hard not to be bullish on U.S.-based nitrogen fertilizer stocks and even recommend them over their European competitors.
Here’s what Carillon Tower Advisers said about CF Industries Holdings, Inc. (NYSE:CF) in its Q1 2022 investor letter:
“Stock selection contributed the most while sector allocation was also positive. An underweight to communication services and an overweight to energy helped performance, while an underweight to consumer staples and an overweight to materials detracted. Stock selection was strong within healthcare and materials but was weak within information technology and industrials. CF Industries (NYSE:CF) manufactures and distributes nitrogen fertilizer. The stock rose as Russia’s invasion of Ukraine accelerated already rising fertilizer prices.”
1. Deere & Company (NYSE:DE)
Number of Hedge Fund Holders: 54
Deere & Company (NYSE:DE) is a Moline, Illinois-based manufacturer of agricultural and forestry equipment and machinery, with a portfolio of products to serve the construction sector as well.
Although the firm posted mixed Q3 FY22 results on August 19, analysts remain bullish on the long-term outlook of Deere & Company (NYSE:DE). Deere & Company (NYSE:DE) observed YoY revenue growth of 22.3% to $14.1 billion during the second quarter. The company narrowed its FY22 net earnings guidance to a range of between $7 billion and $7.2 billion compared to its prior forecast range of $7 billion to $7.4 billion. The revised forecast still falls in line with the consensus forecast of $7.13 billion.
Despite the supply-chain challenges, Deere & Company (NYSE:DE) is well-positioned in the industry due to backlogs and rising market share. The firm’s management believes that the company’s agricultural fundamentals are very strong and anticipates a high single to low double-digit increase in its product prices in the future.
In its Q1 2022 investor letter, ClearBridge Investments presented its outlook on Deere & Company (NYSE:DE). Here’s what the firm said:
“In our engagements with farm equipment maker Deere (NYSE:DE), we have followed new technology as it has developed from early promise of environmental and social benefits to market reality. In March 2022, Deere’s Chairman & CEO and CFO met with ClearBridge’s investment team in our New York offices. While prior to the pandemic we had regularly hosted the company, this meeting was among the most interesting as the relatively new CEO outlined a bold plan that placed improved environmental stewardship squarely at the center of the company’s future.
Industrial farming, at its core, is not an especially environmentally friendly enterprise. Agronomic practices have improved over time, but fertilizer, herbicide and pesticide applications and water usage remain problematic. Deere believes its precision farming technology can drive down chemical and fertilizer volumes materially —possibly by as much as 70% — as sensors and cameras attached to tractors, sprayers and combines help determine the exact level of chemicals that might be required…” (Click here to see the full text)
For more industry-specific stocks that are worth considering, check out the 12 Best Cybersecurity Stocks to Buy Now and the 11 Best Artificial Intelligence Stocks To Buy Now.
